THE ADDED VALUE OF GOVERNANCE BOARDS IN SMALL AND MEDIUM-SIZED FAMILY FIRMS

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Ilse A. Matser ORCID logo, Dirk F. Gerritsen ORCID logo

https://doi.org/10.22495/cocv7i3c4p7

Abstract

This paper explores a possible relation between governance boards in small and medium-sized family firms and performance indicators of the firm. Following the legal framework in The Netherlands, firms can have an advisory and/or supervisory governance board next to the top management. The resource based view is used to discuss the possible valuable resources of family SMEs, including the governance board. Two relevant board functions within SMEs are the contribution of resources and the aid to the strategic process. If a governance board is a valuable resource, the establishment of it should ultimately lead to a better defined strategy and possibly a higher performance. Hypotheses were tested on a sample of 330 Dutch family SMEs. Our results show that governance boards positively affect the existence of written strategic plans and the expected marketability of the firm, while there is no relation with the expected short term sales growth.

Keywords: Boards, Governance, Family Firms, Strategic Planning, Performance

How to cite this paper: Matser, I. A., Gerritsen, D. F. (2010). The added value of governance boards in small and medium-sized family firms. Corporate Ownership & Control, 7(3-4), 470-479. https://doi.org/10.22495/cocv7i3c4p7